Accounting and Finance, Credit Card Processing

Clover Capital: Funds for Small Businesses

by Ben Dwyer

Businesses using Clover systems may be eligible to borrow funds for business purposes through the Clover Capital cash advance program.

Much like competitor Square Capital, Clover Capital provides merchant cash advances to customers. Cash advances are typically easier to obtain than small business loans, but do have some potential drawbacks to consider. Let’s take a look at what Clover offers and what it means for your business’s cashflow.

What is Clover Capital?

Clover Capital is a merchant cash advance program offered by Clover, a Fiserv (formerly First Data) equipment company. It’s similar to a small business loan in the sense that you’ll receive a lump sum of money which you’ll repay over time. The main difference is that cash advances don’t technically have an interest rate and there isn’t a fixed repayment amount. Instead, you’ll repay through a deduction of your daily credit card sales. For that reason, your payments won’t be a fixed dollar value but vary depending on your sales.

Other Companies called Clover Capital

It’s important to note that there are a few companies with variations of the name “Clover Capital.”

The two most similarly named are Clover Capital Financing and, neither of which are affiliated with First Data / Fiserv and not the Clover Capital we refer to in this article. This article refers to Clover Capital as part of the Clover company, owned by Fiserv (formerly First Data.)

Credit card processors that operate on Fiserv’s platform may offer the Clover Capital program, so it’s possible to apply through your Fiserv compatible processor if you’re concerned about applying for the correct Clover Capital funding.

What is a merchant cash advance?

Also sometimes called “working capital,” a merchant cash advance is a form of funding where you borrow money against your future credit card sales. Essentially, a lender “advances” you the money from those eventual sales. (Hence the name “cash advance” instead of loan.) In addition to repaying the amount advanced, you’ll pay a set fee to the lender.

Business Loan vs. Merchant Cash Advance

While they both provide funds for business purposes, business loans and merchant cash advances are different things. A business loan provides you with a lump sum based on your creditworthiness and/or collateral. You’ll repay the original amount, plus interest, through fixed monthly payments.

Merchant cash advances, on the other hand, rarely require collateral and are more flexible about credit scores. Many programs let you have a personal credit score as low as 500. Instead of credit scores, merchant cash advance lenders put more emphasis on strong credit card sales and length of time in business.

You’ll repay the original amount borrowed, plus a flat fee, through a daily deduction of a percentage of your credit card sales. As such, there’s no set repayment amount. Instead, the lender will determine approximately what percentage it needs to deduct form your credit card sales in order to recoup costs in an expected timeframe. For example, a lender may want to be repaid within 18 months. They would look at your daily credit card sales and determine what percentage they would need to deduct on average in order to recoup their advance, plus fees, within 18 months. However, you’re not bound to that timeframe; it’s simply a rough estimate of when the lender expects to be paid back. If your sales slow down, the advance may take longer to repay, while if your sales pick up, you’ll repay the money more quickly. In either case, that won’t be your choice – your sales dictate how much is paid back, because it will be the percentage you agree to when taking the advance.

Clover Capital typically deducts 10-20% of your daily credit card sales for repayment. Your actual percentage will be determined when you apply.

Business loans typically have longer applications and decision times while cash advances boast quick application and fast approval.

Acceptable Uses of Funds

Clover Capital funds can be used for almost any legitimate business expense. You can use the money for upgrading equipment, purchasing inventory, expanding your store, launching a new product, conducting an ad campaign, building a website, and more.

If you’re curious about using the funds for a specific purpose, you can check with your credit card processor before applying.

Eligibility Requirements

In order to be eligible for Clover Capital, you need to have been in business for a minimum of 6 months and have at least $1,000 in monthly Visa and MasterCard transactions. Other requirements, including credit score requirements, may apply.

Advances are available for amounts up to 100% of your credit card sales.

Applying for Clover Capital

Clover Capital is currently only available by invitation from Clover. Existing Clover users that are eligible for Capital will get an email from Clover. (You may also see an eligibility note in your Clover dashboard.)

The email invite will include three “pre-approved” amounts based on preliminary information. You’ll choose one and proceed with the application, which may include requirements to provide recent bank statements, monthly processing statements, and identification, such as licenses or passports. You’ll also typically provide basic information about your business.


Clover Capital pre-qualification

Application approval takes a couple business days, and approved businesses often see funding within 3-5 business days.

Clover Capital vs. Square Capital

A big difference between Clover Capital and Square Capital is the number of processors that can support the programs. Square Capital is limited to Square users. Clover Capital is available to any business that processes using Fiserv or one of its many reseller partners.

However, beyond that, the two are very similar; they’re invitation-only and have similar typical percentages for repayment of the advance.

Switching Processors or Closing a Business with an Active Advance

One thing to keep in mind is that you won’t be able to switch processing companies while you have an outstanding cash advance. Since your repayment is done through deductions from your credit card sales, the processors from whom you obtain the advance will need to remain your processor and have access to your accounts to deduct those fees.

Another factor to consider is the worst case scenario. What happens if you need to close your business while you have an active cash advance? In some cases, you could be liable for the advance, meaning you’ll need to pay it off even if you no longer own a business. The specifics vary by cash advance servicer. We’ve reached out to Clover to specifics on the liabilities and personal guarantees for taking out a Clover Capital advance, but have not heard back from the company at the time of publication.

We’ll update this section with more information as it becomes available.

Have you used Clover Capital to get funds for your small business? Tell us about your experience in the comments section below!

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